Is Wholesaling legal in MA and NH?

Aug 05, 2021

Folks are always asking if wholesaling is legal in MA and NH.  I am not a lawyer and do not give legal advice.  However, I know many lawyers who will confirm it is legal.  Unfortunately, some lawyers and real estate agents are unfamiliar with the process.  They think when you wholesale a property, you are acting as a broker.  If you are unlicensed and acting as a broker, that would be illegal.  However, you are not acting as a broker when you wholesale.  As my attorney friend Christa Emerson says, "As a wholesaler, you are not acting as a broker and you are NOT selling the property.  You are selling your interest in the property.  When you put a property under contract, as long as your contract states that the contract is between you and/or your assignees and the seller, you have equitable interest in the property and you have the legal right to assign your contract to another investor for a fee."  If you want to be connected to Christa, reach out to me.  I am the Chief Connector after all.  

So, what is the sales process of a wholesale deal.  It’s not as difficult as you would think.  It actually feels a little too easy.  If you’ve ever been through a traditional sale of a house where the buyer is there for the entire sales cycle, you will understand what I mean.  The entire sales process includes the offer, getting the offer accepted, moving forward with the purchase and sale agreement, the offer to purchase and then closing.  With wholesaling the sales cycle is a little easier.  The hardest part is identifying an appropriate property.  

Step 1 – Wholesaler identifies a property.  They’ve calculated the ARV (after repaired value), they worked their way backwards from the ARV, subtracting their wholesale fee, what a rehabber will want to make on a deal, rehab costs, financing costs, holding costs, contingency, closing fees to get a MAO (maximum allowable offer). 

Step 2 – Wholesaler makes an offer on the subject property.  This is done with an offer to purchase contract.  On the contract it must specify that the contract is for you an/or your assignees. 

Step 3 – Wholesaler obtains a signed offer to purchase from the seller. 

Step 4 – Market the deal to rehabbers you know, if you don’t know any, reach out to me at [email protected], I may be interested and know quite a few who may be interested.  

Step 5 – Receive offers from potential rehabbers and utilize an assignment contract including your wholesale fees for the rehabber purchasing your contract with the seller. 

Step 6 – The rehabber purchasing the property will then be listed as the buyer on the contract.  They will need to perform on that contract.  The wholesaler waits for the closing to get paid their assignment fee. 

Hopefully that helped a little. 

Bernadette Trafton, Chief Connector

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